Statement on the National Treasury Decision to Withhold Municipal Allocations

The Economic Freedom Fighters (EFF) notes with grave concern the decision taken by the National Treasury to withhold monies appropriated by Parliament to municipalities in the form of equitable shares, announced on 7 July 2026.

The National Treasury will withhold equitable share transfers to 70 municipalities, including the City of Johannesburg, Mangaung, Madibeng, Nkomazi, Buffalo City and Nelson Mandela Bay, among others. The decision to withhold funding comes after National Treasury claims to have made efforts to assist municipalities that have now completely failed to comply.

The EFF notes the persistent mismanagement of municipalities by the ANC and DA, which has led to large sums of money being wasted through fruitless, wasteful and irregular expenditure. According to the Auditor-General of South Africa, since 2021/22 municipalities have incurred R145.21 billion in irregular expenditure R40.14 billion of it in 2024/25 alone, and a further R24.12 billion in fruitless and wasteful expenditure. These are monies that could have been spent delivering clean and drinkable water, sanitation, fixing roads, building houses, parks, libraries, sanitation infrastructure, and creating jobs for young people.

We welcome the realisation that our municipalities have either collapsed or are on the brink of collapse, with service delivery breaking down and basic infrastructure left to decay. However, the solution is not to withhold monies that must deliver services to our people. Municipalities have failed our people, and now the National Treasury is doing the same. The EFF maintains that the solution is not less money, but a reworking of the basic assumptions that have made it nearly impossible for the governance of municipalities to be sustainable. Municipalities have been forced to carry unfunded mandates. The post-1994 assumption that municipalities must finance service delivery mainly from the sale of municipal services has completely failed, as unemployment, inequality and poverty remain persistent amid a failing economy characterised by de- industrialisation.

We have consistently made submissions to Parliament that the equitable share formula, the formula that allocates monies to the different spheres of government and to municipalities, must be revised to increase municipal allocation to over 15%, which currently sits at R110 billion, or 9% of nationally raised revenue. We have maintained that municipalities must do away with tenders for functions they can instead perform through directly and permanently employed staff.

The EFF has also called for the establishment of infrastructure grant technical units in all municipalities, to oversee and coordinate the development, sourcing and delivery of large-scale infrastructure projects through conditional grants from national and provincial government.

In addition, the EFF maintains that a balance can be struck in delivering large-scale infrastructure projects through well-designed public-private partnership agreements, ones that do not operate purely on profiteering, leaving the public with either dilapidated assets or assets built at exorbitant cost, without being dogmatic about this, though it will require a strong and capable state to lead these initiatives.

The EFF calls on the Minister of Finance, MECs of Finance, Mayors, MMCs of Finance and Municipal Managers to cooperate in putting in place measurable steps that will stabilise municipal finances.

We warn the National Treasury against pursuing a path that seeks to collapse the state and reduce it to a mere spectator, allowing decisions on the fate of this country and its people to the private sector and NGOs. That will not stabilise the economy, grow it, or create jobs, it will only deepen poverty, inequality and unemployment. The solution is a capable, well-resourced, corruption-free and developmental state that not only supports private capital but delivers basic social infrastructure and leads the country’s economy.